Real property tax payments for 5 IPPs cut.
By Myrna M. Velasco
State-run Power Sector Assets and Liabilities Management Corporation (PSALM) has indicated that the recently issued Executive Order (EO) No. 88 by President Rodrigo Duterte will reduce real property tax payments (RPT) of at least five independent power producers (IPPs) by as much as P890.5 million.
Instead of paying more than P1.0 billion, the government-run firm emphasized that the scale of RPT charges to the five contracted IPPs will be cut to P205.5 million, on account of the provisions of EO No. 88.
According to PSALM, the IPPs that are set to benefit from the re-calibrated rate of RPT charges will be the Ilijan natural gas-fired power plant; the Pagbilao and Sual coal-fired power projects; the Mindanao coal-fired plant and the San Roque multi-purpose hydropower project.
The Duterte-issued EO effectively reduced the assessment rate level of real property taxes of power projects to 15-percent of the fair market value of specified property, machinery and equipment.
That was essentially trimmed down from the 40 to 80 percent assessment rates that most local government unit-hosts of power projects had opted to apply in their calculation of RPT dues of the generation companies (GenCos) and independent power producers (IPPs).
In the newly rendered policy of this administration, it was likewise prescribed that the RPT payments of power companies be allowed a 2.0 percent depreciation rate per annum, and "less any amounts already paid by the IPPs.
The state-owned company explained that the Presidential policy will be vastly beneficial to it - because under the Build-Operate-Transfer (BOT) contracts for the IPPs, PSALM was mandated to absorb the tax liabilities of these power producers.
"PSALM will greatly benefit from EO No. 88 because under PSALM's BOT arrangements, the real property tax is contractually assumed by PSALM," the state-run firm has expounded.
It thus noted that with the issuance of the Malacanang EO, "PSALM anticipates that its RPT payments will be reduced to P205.5 million," logging in massive savings to the tune of P890.5 million.
Given the magnitude of savings from the RPTs that should have been levied to the five IPP facilities, PSALM emphasized this will give it leeway to re-channel funds "for the settlement of maturing financial obligations of NPC (National Power Corporation)."
The RPT payments of the IPPs had served to be a protracted legal battle for many players in the power industry - with heaps of LGU-hosts of the power projects going after them for P40 billion to P80 billion worth of supposed RPT arrears that had all been based on higher assessment rates.
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|Title Annotation:||Business News|
|Date:||Aug 24, 2019|
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